Prestige Estates to scale down guidance for FY17

Prestige Estates reported a weak set of third quarter earnings where net profit fell 75 percent to Rs 68.30 crore year-on-year (YoY) and new sales value were down 27 percent to Rs 429.30 crore (YoY).

Of the full-year guidance for FY17 base on new sales value, the company has been able to meet 52 percent of the target in the first nine months. Speaking to CNBC-TV18, Irfan Razack, CMD of Prestige Estates said that the company will not be able to meet its FY17 new sales guidance and will have to scale it down.

He further said that cost overruns in legacy projects impacted the company's margins.Below is the verbatim transcript of Irfan Razack's interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on CNBC-TV18. Anuj: Big hit in your profitability, down 75 percent, what went wrong? A: Compared to quarter-to-quarter, profitability is flat. It is almost the same about Rs 98 crore compared to the previous quarter which was about Rs 87 crore. If you compare it to the previous years, previous quarters, there is a change but real estate being lumpy, maybe in that year, in that quarter we had booked some exceptional items. So we cannot compare it directly to that but if you look at it overall, the turnover has been pretty recent. It has been good — Rs 1,250 crore. As far as the financials are concerned, we are quite happy with the way things are going. Operationally, yes, the sales have been flat, have been hit also because of the disruptive environment that we had during the last quarter. This has impacted the overall sale figures compared even to the previous quarter. It has come down quite a bit and if you compare it to the last quarter of the previous year, also there is a dip. This is because of the disruptive atmosphere people were a bit confused. They were looking concerned, there were a lot of rumours that were going on about buying property and real estate and also there was this huge scare that property prices will fall. Now things have stabilised and I believe going forward once again we are going to stabilise more. Sonia: If you look at your own guidance for the full year in terms of new sales value, you only met 52 percent of that guidance as on nine months FY17. So should we take it as a given that you won’t be able to meet the guidance and what could the run-rate be in the final quarter of the year? A: Considering that, we won’t be able to meet the guidance. We have the teams working out as to what levels that we will reach, I won’t be able to give you a number just now but there will be a change in the guidance. We will have to revise it downwards and we have to match up whatever we have done. However if you compare the numbers from nine months of the previous year, nine months of this year in spite of this disruptive period, we have more or less almost in level but we were looking for growth and this growth did not happen only because of the disruptive atmosphere but that is also behind us and we should look forward positively. The team is working on what numbers we can finally get and we will come out with the revised guidance soon. Latha: Is the disruptive period definitely behind us? Therefore, would you be able to give some ballpark indication, would you have to trim your guidance by 20 percent. How is Q4, what is the first six weeks indicating? A: First six weeks have been positive. In fact, after January 15, the good period has started in the sense people don’t buy for one month between December and January, that is also behind us. I believe that going forward, things will be positive, things will good but I cannot fix a number just now. In fact, we have a meeting this week with the sales and marketing team to work out the numbers and give us something which we will be able to commit and I don’t want to hazard a guess. For full interview, watch video...